Not Yet Incorporated

Not Yet Incorporated

Investor · Seattle, WA · Member since 2011 · 84 posts · 10 votes

We're just getting started and already found a property we like and can purchase. We probably won't have a problem finding a buyer, but the problem is we aren't incorporated yet. Our method on this was to seller-finance, but we ultimately want to have it under the corporate name. Are there any complications with buying the property as an individual, then selling it to the corporation. That time frame would give the current tenant the time to move out and our corporation the time to set up.

But then we would get double-taxed, wouldn't we? But we would sell it to the corporation for exactly for what we bought it, so there wouldn't be any profit. Thoughts and/or suggestions? This is a good deal we don't want to miss out on, but don't want to set us up in a worse position. Thanks for any help in advance!

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J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
15y

In theory, there is nothing complicated about this transaction (and it would work the way you stated -- the company would purchase the property from you at market value, which would be the purchase price assuming it was shortly after purchase).

That said, it sounds like you have some gaps in your knowledge about corporations (based on your comment about taxation), so I would highly recommend talking to a qualified CPA and/or business attorney.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    15y

    In theory, there is nothing complicated about this transaction (and it would work the way you stated -- the company would purchase the property from you at market value, which would be the purchase price assuming it was shortly after purchase).

    That said, it sounds like you have some gaps in your knowledge about corporations (based on your comment about taxation), so I would highly recommend talking to a qualified CPA and/or business attorney.

  • Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
    15y

    Becky...

    You wont get double taxed, the tax rates could vary between an individual and Corp. And the Corp if a C could have a double tax on the distribution of the profits.

    If youre a credit Union member maybe set a time with one of their member attorney firms who offer a free 1/2 hour consultation.

    If you care to shoot me a PM and we can chat and I will give your the fast 15 minute rundown

  • Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
    15y

    I agree with J Scott, you sound like you need to really talk to a CPA. It is not a big deal to open up an LLC, or a trust, but you need to have a plan. Attorneys will give you advice on asset protection, but it does not always jive with your accountant.I would start by locking the deal up under contract first, so no one else gets it. I would make sure my contract states that it can be assigned. Once it is in contract, contact an attorney, and an accountant and explain your deal. Once you open up the proper entity, assign your contract over to it and close the deal! I will also offer any advice for 15 minutes or so if you want to PM me. Best of luck!

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